Retail Individual Investors (RIIs):
- If the retail portion is oversubscribed, SEBI mandates a lottery-based system.
- Each investor can apply for a minimum of one lot (usually the smallest application size).
- If the number of retail investors exceeds the number of available lots, a computerised draw (lottery) is conducted to allocate shares randomly.
- For example, if 1 lakh lots are available but 5 lakh valid retail applications are received, only 1 in 5 applicants will receive an allotment.
Non-Institutional Investors (NII or HNIs):
- HNI allotment proportional to the number of shares applied for.
- For example, if this category is oversubscribed 10 times, each investor may receive roughly 1/10th of the shares they applied for.
Qualified Institutional Buyers (QIBs):
- Allocation is also proportional but conducted after the IPO closes.
- Institutions like mutual funds, insurance companies, and banks participate, and their portion is generally reserved at 50% of the total issue size (for mainboard IPOs).
Employee and Shareholder Quotas:
- If there is a specific reservation for employees or existing shareholders, allocation in these categories is done either on a proportionate lottery basis, depending on oversubscription.
Key Points to Remember:
- Oversubscription not guarantee allotment, especially in the retail category.
- The higher the oversubscription , the lower your chances of getting shares—unless you apply through categories with better odds (like HNI or QIB, if eligible).
- Refunds for unallotted shares are usually processed within a few days after allotment.
